Macklowe v. Macklowe: History and Impact of one Divorce upon the Legal Landscape

September 19, 2022

By Elizabeth Doty.

On March 12, 2020, spectators of the art world far and wide learned of the court-ordered liquidation of the once-in-a-generation art collection owned by Harry and Linda Macklowe.^[1] The former couple’s divorce was a media proclaimed bitter saga costing both sides millions. The forced sale of their renowned 165-piece art collection was the final consequence of the 14-week contentious divorce trial.^[2] The first part of the collection’s two-part sale went under the hammer at Sotheby’s this past November. The highly anticipated 35-lot sale fetched $676 million, bringing the collection well within reach to break the record for the most expensive art collection sold at auction.^[3] Prior to the Macklowe’s two-part sale, David Rockefeller’s collection held the title as it sold in 2018 with Christie’s for $835.1 million.^[4] Despite 30 more lots still to be sold this May, the Macklowe collection is on track to surpass the Rockefeller sale and set even more records for the already bursting art market. However, within the legal context of complex asset division, the question remains: what is in a sale? As far as understanding the Macklowe Collection, its breadth and depth, it is first important to view the sale within the context of the divorce, the owners of the collection themselves, and their role in the art world.

Background

Linda and Harry Macklowe married in 1959 and remained together for 59 years. Ms. Macklowe is a staple in the 21^stcentury art industry, being an honorary trustee of both the Guggenheim Foundation and the Metropolitan Museum of Art. Ms. Macklowe is largely credited with amassing the marriage’s collection, which explains her battle to keep the collection together in one piece under her name. On the other hand, Harry Macklowe is a real estate tycoon well known for his firm, Macklowe Properties, which has owned and developed many famous New York buildings such as 400 Madison Avenue, 540 Madison Avenue, the General Motors Building, and the iconic Drake Hotel that was demolished to build the infamous 432 Park Avenue. While 432 Park Avenue may be an architectural feat, critics and others have widely commented that despite the beautiful apartments and views, the building itself has had a host of problems.^[5] So while the real estate mogul is certainly no stranger to courts and lawsuits, matrimonial court may have been a different venue than expected. After a nearly six-decade-long marriage, Ms. Macklowe filed for divorce in 2018, citing irreconcilable differences.

The Divorce

In 2019, Forbes estimated the Macklowes’ net worth to be approximately $900 million- $1.1 billion; however, due to the divorce and division of assets, it is estimated to be between $450 million and $550 million.^[6] The court divided up two Manhattan apartments, cars, and a 150-foot yacht in addition to the 165-piece art collection^[7]. While the other assets were a matter of preference, per court documents, Ms. Macklowe preferred and argued hard to keep the art collection all together and under her control. A careful and intentional labor of love, the art collection was reportedly amassed primarily by Ms. Macklowe. At trial, she requested the court award the collection to her and the real estate interests to Harry with a cash distributive award to him in order to equalize any discrepancy.^[8] This arrangement, however, did not suit Mr. Macklowe, who argued for the collection’s sale with the proceeds distributed equally on the grounds that the couple only had $600,000 in their bank accounts. Thus, a sale of the collection was deemed necessary in order to make up for their shortage of cash and, per Mr. Macklowe’s attorney, allegedly to cover Ms. Macklowe’s maintenance.^[9]

After trial, the court divided the artwork into three “Schedules” Ms. Macklowe was awarded all of the artwork in Schedule I while Mr. Macklowe was given his equalizing credit for fifty percent of his marital share, and Schedules II and III were to be sold with the net proceeds distributed evenly to each party.^[10] Though perhaps not fully achieving her ultimate stated goal, Ms. Macklowe would have been able to keep a large portion of the collection in this scenario.^[11] Yet, shortly after the decision and settlement, Mr. Macklowe married financier Ms. Patricia Landau and paid for the billboard to prove it; the famed 24-by-42-foot-wide portrait of the new Macklowes was posted on the very 432 Park building that the former Mrs. Macklowe once occupied. Following this, Mr. Macklowe kept the multi-unit 78^th-floor corner apartment, and Ms. Macklowe filed an appeal.

She continued to argue that rather than the collection be split into the three schedules, it should be valued and distributed to her with the equalizing payment made to Mr. Macklowe. The Appellate Division of the First Department categorically rejected her approach and found in agreement with the trial court that it was in the parties’ best interest to appoint a receiver to sell the art collection.^[12]

In New York State, the division of complex property assets, like those in dispute in the Macklowes’ case, are governed under the domestic relation rules.^[13] Specifically, New York’s jurisdictional approach is that of equitable distribution of the property. Meaning that the parties in a divorce can seek a share of specific assets rather than a 50/50 financial split (that approach is called community property). However, seeking to determine what truly is equitable in a divorce is highly fact sensitive and complex, especially when parties, expert witnesses, and even the court cannot achieve compromise on division. In such cases, the court relies upon the liquidation process to achieve efficiency even if it undermines equity.^[14] Other questions for the court include a ruling on whether the asset is even considered marital property at all and what the valuation date of the asset is, which can significantly vary the worth of the asset, especially in regards to the art market.^[15]

Sotheby’s Winning the Sale

On March 18, 2020, not even a week following the appellate court’s decision to liquidate the collection, art dealer Michael Findlay of Acquavella Galleries halted the sale of the collection due to the COVID-19 pandemic. Findlay was made the court-appointed receiver with instructions to broker the sale of the 65 most valuable works in the collection within a three-year time frame. Despite the time constraint, Findlay’s postponing of the sale was certainly in the best interest of the parties as they waited out the pandemic and perhaps afforded auction houses a bit more time to prepare the funds for the guarantees. In the end, Sotheby’s won the right to the sale. Undoubtedly, it came down to which auction house could provide the biggest guarantee and ensure the highest amount of money that could be realized if given the chance due to the sale being more than just a sale, but rather part of a divorce settlement. While both Christie’s and Sotheby’s kept their pitches close to their vests, a representative for Sotheby’s acknowledged a “very competitive process.”^[16] Sotheby’s guarantee was ultimately undisclosed but is estimated to have been in the $500 million -$600 million range.

First Sale^[17]

The first half of the collection sold for $676 million with Sotheby’s on November 15, 2021.^[18] Both Linda and Harry attended to watch all 35 lots sell under the control of veteran Sotheby’s auctioneer Oliver Barker. The sale was expected to go for anywhere between $444 million and $619 million, but instead it realized over $57 million more and set the record for the most valuable sale in the auction house’s 277-year history.^[19] Bids came in from over 25 countries, and four artworks totaled more than $50 million dollars alone. Since the COVID-19 pandemic hit in March 2020, the high-end art market, many collectors, investors, and casual onlookers have been watching large sales such as the Macklowes’ with a keen eye. The Macklowe Collection did not disappoint. Even with 21 lots backed by irrevocable bids (third-party guarantee that the consignor will ensure a minimum return on their work), the sale broke records for several artists with auction-high prices being set. Notably, Jackson Pollock’s Number 17, 1951 from his Black Paintings series sold for $61 million with fees, and Agnes Martin’s Untitled #44 sold for $17.7 million.^[20]

Additionally, Alberto Giacometti’s alien-esque pointed nose sculpture Le Nez (“The Nose”) was a top lot of the night, achieving over $78.4 million above its $70-million estimate.^[21] However, it was Mark Rothko’s No. 7 (1951) that sold for the highest bid at $82.5 million with fees to an undisclosed bidder.^[22] While the Giacometti and Rothko pieces may have set auction highs, the breadth of the lots cannot be understated; also on the block were Cy Twombly’s Untitled (2007), a wall-encompassing canvas of “dripping red peonies”^[23] (sold for $59 million); Andy Warhol’s silk-screen Nine Marilyns (1962) that sold for $47.3 million; Philip Guston’s Strong Light (1976) that sold for $24.4 million; and Gerhard Richter’s Abstraktes Bild that sold for $33 million. Throughout the evening, and with each lot, it was evident the influence of Linda Macklowe’s collector’s eye, as her love for abstraction and the subtle uniqueness of each piece fit together to form one carefully curated trove of art.^[24]

Second Sale^[25]

It was anticipated that with the second sale, which took place on May 16, 2022, the collection would go down as the most expensive ever sold. Indeed it did, surpassing the former record holder, the Rockefeller Collection’s 2018 sale ($835.1 million), with a total of $922 million (the first part achieving $676 million and the second part achieving $246.1 million). The Macklowe Collection’s presale value was expected to be around $200 million for the 30 remaining lots, but in reality it cleared about $46 million more. To inspire some further drama and hype for the sale, in February, Sotheby’s initially only revealed 16 of the 30 works to be sold before finally revealing the remaining 14 closer to the sale in May.^[26] Still to be sold in the second sale was an untitled Rothko painting from 1960 that has never been publicly exhibited and was estimated to go for anywhere between $35 million and $50 million. It fetched $48 million and was the top lot of the night.^[27] Another Giacometti sculpture depicting Giacometti’s brother Diego titled Diego sur stèle II (1958) was estimated to go for $7 million- $10 million and achieved well within range at $8.5 million; Gerhard Richter’s Seestück (Seascape) (1975), estimated at $25 million- $35 million, sold for $30.2 million; and another Andy Warhol, this time a self-portrait from his final Fright Wig series in 1986, estimated at $15 million- $20 million, sold for $18.7 million.^[28] Other noteworthy pieces include a work by de Kooning from 1961 which sold for $17.8 million and Sigmar Polke’s “The Copyist” which sold for $6 million.^[29] Altogether, the collection consisted of just 65 pieces which all sold either at or well over their estimated ranges. Comparatively, the Rockefeller Collection consisted of 1,580 lots offered across several sale dates, making it arguably no contest as to the true value of the Macklowe Collection that was priced on the block. Perhaps more important is the storied role the collection and its sale will now play in art market history.^[30]

Conclusion

The art and legal industries had the unique opportunity to stand by on the sidelines of not only the protracted sale of the Macklowe collection but also the embittered epilogue to a decades-long marriage and the legal ramifications of it. The sale of the Macklowe collection was indicative of the ever present, quiet power the legal system holds, as the court resorted to liquidation when it came to the Macklowe’s unsettled valuations of the assets at the end of their marriage. Further, the collection’s sale is a reminder of the momentum the fine art market has had over the last decade and its strength to demand prices over their estimations even in the face of a global pandemic. Many commentators and critics alike expressed concern that shifting tastes in the market (away from blue-chip investments towards instead younger, emerging artists^[31]) may have impacted the sale’s prices. However, the sale performed and served as a testament to the art market’s continuing demand for household-name works, the individual novelty of many of the extraordinary pieces, and the overall esteemable quality of the collection built over the course of half a century.

About the Author: Elizabeth Doty is a recent graduate of the Maurice A. Deane School of Law at Hofstra University and will be joining the Bronx County District Attorney’s Office as an Assistant District Attorney in the Fall of 2022. During her time in law school, she served as the Managing Editor of Articles of the Family Court Review and pursued her interest in the intersection of art, law, and policy. She graduated with a degree in history from Fordham University.

Additional Reading

Macklowe v. Macklowe., N.Y. Misc. Lexis 6026 1, 62, 75 (N.Y. Sup. Ct. Dec. 13, 2018), aff’d 181 A.D.3d 475 (2020).

Anthony J. Casey and Julia Simon-Kerr, A Simple Theory of Complex Valuation, 113 MICH. L. REV. 1175 (2015).

Doty, E. (2022). Married to Monet: Alternatives for complex asset division in the modern age of matrimony. Family Court Review, 60(3), 575–589. https://doi.org/10.1111/fcre.12660

1. Macklowe v. Macklowe., N.Y. Misc. Lexis 6026 1, 62, 75 (N.Y. Sup. Ct. Dec. 13, 2018), aff’d 181 A.D.3d 475 (2020). ↑
2. James Barron, Real Estate Mogul Taunts Ex-Wife With 42-Foot-Tall Photo of New One, N.Y. Times, Mar. 10, 2019, at A16. See also, Guy Martin, The Epic Macklowe Divorce: How a Famous $1 Billion Art Collection Got Snagged In Court, Forbes, Oct. 31, 2019, https://www.forbes.com/sites/guymartin/2019/10/31/the-epic-macklowe-divorce-how-a-famous-1-billion-art-collection-got-snagged-in-court/#78ea5e362ddc. ↑
3. Shivani Vora, Sotheby’s Auction to Sell Warring Macklowe Art Collection Brings in Record $676 Million, Architectural Digest (last visited Feb. 13, 2022), https://www.architecturaldigest.com/story/macklowe-auction-sothebys. ↑
4. Id. ↑
5. Kim Velsey, It Just Keeps Getting Worse for 432 Park, Curbed (last visited Feb. 13, 2022) https://www.curbed.com/2021/09/432-park-new-lawsuit-macklowe.html (discussing the plague of problems residents of 432 Park have experienced such as elevators shutting down during high winds, one resident being trapped in an elevator for over an hour on Halloween, mold, leaks, a trash chute that “sounds like a bomb, and “intolerable” noise and vibration issues.) See also, Board of Managers of the 432 Park Condominium v. 56th and Park (NY) Owner, LLC, Charles Garner, et al., https://iapps.courts.state.ny.us/nyscef/ViewDocument?docIndex=B4H/k/NAgBeio9bA/DIhew== ↑
6. Carlie Porterfield, Real Estate Tycoon Harry Macklowe And His Ex-Wife’s Art Collection Nets $676 Million In First Of Two Auctions, Forbes, (last visited Sept. 1, 2022). ↑
7. Macklowe, N.Y. Misc. Lexis 6026. ↑
8. Macklowe, N.Y. Misc. Lexis 6026; see also, Katya Kazakina, The Macklowe Collection Delivers an Eye-Popping $676 Million at Sotheby’s, Making it the Most Valuable Sale in Company History, artnetnews, (last visited Feb. 15, 2022), https://news.artnet.com/market/macklowe-auction-sothebys-nov-15-2034992. ↑
9. Macklowe, N.Y. Misc. Lexis 6026; see also, Guy Martin, The Epic Macklowe Divorce: How a Famous $1Billion Art Collection Got Snagged in Court, Forbes, (last visited Feb. 15, 2022), https://www.forbes.com/sites/guymartin/2019/10/31/the-epic-macklowe-divorce-how-a-famous-1-billion-art-collection-got-snagged-in-court/?sh=26991c202ddc. ↑
10. Macklowe, N.Y. Misc. Lexis 6026 at 38. ↑

11. Valued at $39,963,175 and included Marden’s Red Rocks (5) valued at $12 million; ↑

12. Id. at 38. ↑
13. N.Y. Dom. Rel. Law § 236 (B) (5) (McKinney 2020). ↑
14. Id. at 61; N.Y. C.P.L.R. § 5106. (Consol. 2020). ↑
15. Id. (Concerns about the worth of a work varying based upon the date of its valuation are especially salient for the purposes of art valuation which relies heavily on a volatile market). See also, Sophie Chung, Good Art, Ugly Divorce, Center for Art Law (last visited Feb. 17, 2022), https://itsartlaw.org/2020/01/28/good-art-ugly-divorce/. ↑
16. Anna Brady, Sotheby’s wins ‘dogfight’ to sell $600m art collection of Harry and Linda Macklowe, The Art Newspaper (last visited Feb. 18, 2022), https://www.theartnewspaper.com/2021/09/09/sothebys-wins-dogfight-to-sell-dollar600m-art-collection-of-harry-and-linda-macklowe. ↑

17. The Macklowe Collection, Lots, Sotheby’s (November 15, 2021, 19:00 EST), https://www.sothebys.com/en/buy/auction/2021/the-macklowe-collection?locale=en. ↑

18. Kazakina, supra note 8. ↑
19. Id. ↑
20. Robin Pogrebin, Blue-Chip Art From Bitter Macklowe Divorce Brings $676 Million at Sotheby’s, New York Times, (last visited Feb. 17, 2022), https://www.nytimes.com/2021/11/15/arts/design/sothebys-macklowe-auction-rothko-warhol.html. ↑
21. Id. ↑
22. Id. ↑
23. Id. ↑
24. Id. ↑
25. The Macklowe Collection, Lots, Sotheby’s (May 16, 2022, 19:00 EDT), https://www.sothebys.com/en/buy/auction/2022/the-macklowe-collection?locale=en. ↑
26. Id; see also Katya Kazakina, The $922 Million Macklowe Sale at Sotheby’s Displaces the Rockefeller Estate as the Priciest Private Art Trove in Auction History, ArtNet News, (last visited June 13, 2022, 5:35 PM) https://news.artnet.com/market/2022-macklowe-collection-sale-part-two-2114924. ↑
27. Id. ↑
28. Kabir Jhala, Sotheby’s unveils second $200m tranche of works from the Macklowe Collection, The Art Newspaper, (last visited Feb. 18, 2022), https://www.theartnewspaper.com/2022/02/18/sothebys-unveil-the-next-works-from-the-macklowe-collection-up-for-sale-for-dollar200m-this-may-in-new-york. ↑
29. Kazakina, supra note 26. ↑
30. Id. ↑
31. Scott Reyburn and Robin Pogrebin, The Macklowe Collection Tops $922 Million at Auction, New york Times, (last visited June 13, 2022, 6:00 PM), https://www.nytimes.com/2022/05/16/arts/design/macklowe-collectors-sothebys-art-warhol-richter.html. ↑